We won’t investigate MPs- ISO tells off IGG - Daily Post Uganda

We won’t investigate MPs- ISO tells off IGG

IGG Irene Mulyagonja

KAMPALA: Officers at Internal Security Organisation have reportedly declined to a call by the Inspector General of Government (IGG) Irene Mulyagonja to investigate COSASE MPs AS, they have their own report on Bank of Uganda (BoU) which they will give to the consumer of intelligence.

Meanwhile, Uganda’s security agencies are ready to launch investigations into transactions between the Bank of Uganda (BoU) and the buyers of some of the assets of the defunct commercial banks as parliament strengthens recommendations of the Committee of Commissions, State Authorities and State Enterprises (COSASE), Eagle Online can say.

According to the source that talked to Eagle Online, among the concerns that the security agencies want to investigate is the Shs478 billion BoU officials claim to have spent on Crane Bank Limited (CBL) but have failed to account for it all.

“You know very well that MPs have recommended that we take over the process after they make final recommendations and I promise you we shall do our work as expected. No one is above the law as far as government spending money is concerned,” a financial intelligence detective told Eagle Online over the weekend.

It should be remembered that COSASE on December 20, 2018 directed the Auditor General John Muwanga to under the audit on the accountability of all the money injected in CBL after it emerged during the probe that BoU officials did not have all documents relating to the use of the money between October 20, 2016 and January 25, 2017 while CBL was in receivership.

Mr Muwanga among others specifically was to establish whether Shs466 billion injected in as liquidity support was used to settle obligations of bonafide customers that had sufficient account balances prior to transactions.

In his special audit report of Shs478 billion, Muwanga said Shs157.9 billion was recovered from Dfcu and CBL non-performing assets, leaving an outstanding balance of 320.8 billion.

During the COSASE probe, it was established that CBL needed Shs157 billion to remain operating normally much as BoU officials injected in Shs478 billion before selling the bank to its rival DFCU Bank at Shs200 billion, paid in installments.

Commenting on the above transaction, the MPs said BoU ‘lent’ Dfcu part of CBL’s loan book worth Shs570 billion. In the original agreement Dfcu Bank was supposed to take over all the loan book but BoU could later on transfer only Shs200 billion of CBL loan book to its rival interest-free yet the interest would be recovered by BoU from CBL shareholders who were not party to the agreement.

The above is part of the controversy that the detectives want to investigate given that BoU did not carry out valuation of the assets and liabilities of CBL but relied on the interim inventory report of December 12, 2016 and due diligence undertaken by DFCU Bank to transfer CBL’s loan book assets of Shs200 billion.

The source said investigators will also look into BoU’s relationship with MMKAs Advocates who acted as transaction advisors as BoU transferred CBL’s assets to Dfcu Bank. The law firm asked for about Shs4.2 billion for this exercise. MPs have recommended that MMKAs be scrapped from the list of BoU service providers.

According to the source, the detectives are also interested in the transfer of loans assets of Greenland Bank, International Credit Bank and Cooperative Bank as documents did not show the assets sold, selling price, period of sale, unsold assets, performing and non-performing loans from the time of closure up to-date.

Important to remember is that the total book value of the three banks totaling to about Shs135 billion was sold at 93 percent discount to Shs8.9 billion. The total value included secured loans worth Shs34.5 billion. BoU failed to give a convincing answers as to why this figure was added together with unsecured loans and others as they sold them to mysterious company Nile River Acquisition Company (NRAC).

The MPs also established that M/s JN Kirkland and Associates who were hired to implement exit strategy for the three banks by BoU ended up as a local agent for NRAC, with rights to run an account in Citi Bank in which all recoveries of the Shs8.9 billion portfolio are deposited.

NRAC was not registered in Uganda as a local or foreign company which is a violation of sections 369 and 370 (1) of the Companies Act. M/s Octavian which registered NRAC in Mauritius was also never registered in Uganda.

Yet the then Director Commercial Banking in BoU Ben Sekabira who was the agent of the liquidator/receiver pf the three defunct banks was also up to August 12, 2009 the agent of NRAC which created conflict of interest. The investigators are interested in Sekabira activities as well of those of former executive director of bank supervision Justine Bagyenda who allowed M/s Octavian to be the only bidders for the assets of the three defunct banks, some of whose former shareholders have since died.

The investigators, according to the source are waiting for MPs to furnish government with the final recommendations and expect to get instructions from Cabinet to investigate BoU top officials involved in the sale of banks.



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